The FX malady has ravaged the nation for the last two years and unfortunately there are no sign of it abating. Instead, some naysayers are preparing for a N1000 USD. We all, sincerely, hope not to get there. While at it, the CBN’s ban of 41 items last year, came as a great pain to the average man on the street. We were all told to see as a form of sacrifice for the nation. But we all know in Nigeria, sacrifice is expected of the common man and not the upper and connected class. Or how would you describe the huge amount of money made by the banks when cards are used abroad? What would you find as justification for the lorry load of cash minted for BDCs who get money cheap from CBN via the banks and sell sky high? No wonder the foreign companies such as Microsoft, Oracle, IBM and others have joined the train of those raping Nigeria to death. And they are not doing it behind any dark alley, but in full view of everyone with CBN and other regulators cheering them on.

Let’s use Microsoft as an example of this perfidy. Every large company in Nigeria pays for Microsoft software and the market has become so lucrative that the Nigerian office has been upgraded to a subsidiary and then moved to a lavish office at Civic Towers. You would think that would make them a corporate Nigerian citizen? Hell no! Microsoft charges companies in Nigeria in USD and fees are remitted to Ireland immediately. Even the smallest bank pays at least $1M per year in fees with likes of GTBank, First Bank, UBA, paying almost $2M per year.

Even using a conservative $1M per bank, it means an average bank bill has moved from N160M to N400M+ in under 2 years – even though the underlying services are same. Wait, isn’t Microsoft in Nigeria? Doesn’t the law say that bills should be Naira? Microsoft will tell you that the contract is with Microsoft Ireland and not Nigeria. Meanwhile the poor Nigerians who work with Microsoft in Lagos are paid in Naira, anyway. If you ask why they are not paid in USD, they would cite local laws and say that the underlying employment contract is in USD. Now as the USD has gone bunkers, you expect salary to move in line with the new FX rate? Fat chance. Their salaries are stuck at the same Naira rate.

Invariably the story above is the same for every international company operating in the country. As Nigeria is going through a bad patch, they have ensured their revenue stays same. In fact, some, such as IBM, increase their fees by about 2% each year, factoring in some random rubbish. On the other hand, the cost of managing their operations in Nigeria has reduced by almost 50% since the Naira depreciated against the USD.

Meanwhile, hapless customers such as telcos, banks, even regulators such as CBN, run around to look for USD to transfer abroad with threats of service interruption chasing them around like Boko Haram. In the midst of this madness, our regulators such as CBN, NOTAP, NCC, FIRS, etc. have kept a resounding silence and looked away up to a point that questions need to be asked if they are complicit with this.

What should be done is very simple – large Original Equipment Manufacturers (OEMs) operating in Nigeria such as Google, Microsoft, IBM, Visa, MasterCard, Oracle, etc. should only invoice in Naira. Contracts must be tied to alocal subsidiary, and cannot be indexed to USD.

The country must rise up to protect itself. Even the European Union, the bastion of free market, calls the likes of Apple, Google and Microsoft to order… routinely. We have the laws already; we just hope CBN and others have the political will to enforce them.

@Black ant, from my armchair position in my very obscure corner of this highly demotivating abyss called Nigeria, I must confess that I’m tired of screaming “No!” “What are they thinking!” “Not Again!” It is becoming obvious to all that Nigerian is being run aground by mediocre men!!!

Thanks a mill for shedding light on this aspect of the rip-off that so many of us are unaware of. Please what can we do to call the regulatory agencies to order? Start twitter hashtags? #SaveTheNaira #AllForeignCompaniesMustAcceptPaymentsInNaira

@blackant: while your pain seems to be rea there are a few things you need to understand. 1. These companies sell software which is not made in Nigeria but helps us run our economy, think banking platforms, apps, communication etc… 2. The people who built these solutions invested in USD and account in USD. Most of them are traded on the net York stock exchange 3. You can only insist on collecting local currency for locally produced goods and services. E.g. You can’t buy from Amazon or Asos and pay in Naira. 4. Lastly insisting that these companies charge in naira doesn’t solve your problem.. if they agree to they will adjust prices to accommodate the currency risk. 5. The real issue here is that as with all other sectors NIGERIA doesn’t produce the goods and services it consumes. If we made our own software,we won’t have to import software with dollars. 6. The solution is that we should be more productive. You can start a company and build a database and then charge in naira for instance. 7. Regarding paying their employees in naira, you may have a point there

black ant, your opinion is laudable but faulty. first off, the international companies make their demands for compensation for services rendered in the currency of the home country that international company is incorporated in, thus they have to be paid in USD; its the law. also, most of these contracts are long term and if the currency for payment is a volatile one like the naira, tat always loses value, they would lose..and why should they lose because a country would not receive economic sense to make right policies? if you were Microsoft and the cost of producing a workstation cost 1000USD and logistics 100USD and U sold it for 1500USD as at 2012, that’s about 300k naira,… of the contract stipulated pay in naira, in 2016, 300k is less than 1000USD…loss for you…u get it? I’m 21 and I cannot accept such contract terms.. Microsoft isn’t responsible for Naira’s devaluation. the smart thing for Nigerians to do is to stop putting unnecessary pressure on the FX market… less naira should be chasing the dollar… let Nigerian multinationals abroad accept payment in dollars instead of naira and a law should be passed to send it home. That way the supply of the dollar in circulation will increase reducing its price… Joint venture agreements between Nigeria and foreign multinationals should ensure that some of tone production process is done in Iberia to reduce the necessity for compensations in foreign currency…. and all receipts that must be paid in foreign currency should be handled by a financial institution other than the FX.. There are many strategies I can point out but the comment box isn’t the place to do so… but this should be kept in mind…1. reduce the leakage of naira abroad. 2. formulate policies to reduce excess demand for the foreign currencies 3. keep a healthy supply of the foreign currencies… By the way, I’m really interested to write for bellanaija…. I really have a lot of passion for insightful and incisive economic analyses… not the basic textbook type… I’d appreciate the chance to write for bellanaija.

This is a smart response. You already said the money is repartraited almost immediately. To that end dollar is dollar, devaluation is not their business. In banking you can borrow in fx, you can do a forward transaction in fx. Nobody cares the changes just pay me the dollars I gave u. If u get it cheaper all well nd good.

Lastly the tax guys can correct me. But generally speaking if they have to change some of the dollars to pay tax then they will be paying more tax. The only thing is that inflation somewhat nulls the effect.

Please do write. They have an email for sending articles. And even if they don’t publish, send to other blogs and keep sending. Our voices and bright ideas are all we have right now … you never know what you would share that will get the cogs of the wheels of some brain or the other moving, or spark the right kind of insights, or stir us to positive action.